Nepal, China sign first-ever transit treaty; agree to have rail link to end dependency on India

Kathmandu: Nepal and China have signed 10 Memorandums of Understanding (MoU), including the transit and transportation treaty, and exchanged letters on various areas of cooperation during Prime Minister KP Sharma Oli's ongoing visit to the country.

China on Monday agreed to Nepal Prime Minister K P Oli's request to build a strategic railway link between the two countries through Tibet to reduce land-locked Nepal's total dependence on India, as the two sides cemented their ties by signing 10 agreements including a landmark transit trade deal.

File image of Nepal's Prime Minister K P Sharma Oli. AFP

Oli embarked on his maiden official visit to China on Sunday at the invitation of Chinese Prime Minister Li Keqiang.

Among the most important deals is the transit and transportation treaty that Nepal and China signed for the first time. It will end the Himalayan nation's total dependency on an Indian sea port for third-country trade links.

These agreements and MoUs were signed after the meeting between Oli and Li in Beijing on Monday morning.

After five-month agitation in Nepal's southern plains by people of Madhes region over the republic's new Constitution's provisions, Nepal's trade with third-country was halted. It made the Nepalese leadership to opt for an alternative to the Haldia port of Kolkata.

With the latest agreement, Nepal will be able to use the Chinese sea port for third-country trade through the nearest Tianjin port that is 3,000 km from Nepal border. India's Calcutta port is 1,000 km from from Nepal.

There are concerns that Nepal cannot immediately use the Tianjin port as infrastructure in Nepal's side is poor and the Chinese side is located at a higher altitude.

The another agreement signed is about Chinese soft loan for construction of a regional airport in Pokhara, some 200 km from Kathmandu. China has pledged $216 million soft loan for construction of an airport in Pokhara, the second largest city of Nepal.

According to details of the agreement provided by the Nepalese side, Nepal and China also signed the Free Trade Agreement to boost the bilateral trade.

China has also agreed to explore oil and gas resources in Nepal and will provide all technical and economic support.

Similarly, one of the commercial banks in China will open its office in Nepal as per another agreement. Nepalese banks can also open their branches in China.

China will help in installation of solar panels in 32,000 households. Agreements in the fields of science and technology, sister-city relations between various Nepalese and Chinese cities, and establishment of Nepal's Consular General Office in Chengdu, China, were also signed, said Gopal Khanal, foreign relations expert to Prime Minister Oli.

China will also construct a bridge in far west of Nepal in Hilsa that will connect Nepal and Tibet. Hilsa was a traditional trade route.

Oli is scheduled to meet Chinese President Xi Jinping in the afternoon.